In 2005, the UN invited some of the world’s largest institutional investors to help develop the Principles for Responsible Investment. Since then, the number of financial companies signing on to the program has grown from 100 to over 3,000 representing almost US$100 trillion in assets1.
Our involvement began when Sun Life Assurance Company of Canada, signed on to the UN’s PRI initiative. As an affiliate, it also committed Sun Life Global Investments to meeting the UN’s PRI goals, anchored to these six core Principles1:
To understand how we integrate ESG into our day-to-day work, let’s start with an overview of what we do. SLGI Asset Management Inc. is the Portfolio Manager of a suite of managed solutions as well as stand-alone strategies. Our managed solutions include allocations between various asset categories, regions and management styles, using sub-advisors from around the globe.
Our ESG activities in both cases centre on manager selection and ongoing monitoring. We expect our subadvisors to consider ESG issues at every step of the investment process. This may include comprehensive security and industry analysis, forward-looking portfolio construction and ongoing risk management and monitoring.
Our objective is to assess the long-term sustainability of each investment strategy’s value proposition. Importantly, prospective and current sub-advisors have to demonstrate how ESG considerations factor into their investment decisions to support overall value generation and risk management.
In keeping with our commitment to hold our sub-advisors to account, we monitor each sub-advisor across a broad range of criteria, including ESG integration. This includes quantitative analysis of the portfolio. As well, they are required to complete an in-depth, annual questionnaire that clearly outlines their approach to ESG, and are subject to ongoing monitoring. And, if necessary, we engage with the sub-advisor to help enhance the effectiveness of a strategy’s ESG integration.
In addition, we use third-party tools to measure each portfolio’s ESG characteristics versus their respective investable universes. We also compare how fund characteristics change, both over time and versus peers to identify areas that may require further analysis or engagement.
Further to reviewing how ESG factors are being incorporated in a portfolio today, we also monitor how the process evolves over time to validate that our sub-advisors continue to improve practices, acting as responsible stewards of investors’ assets.
We also emphasize active ownership through proxy voting. A proxy vote gives shareholders a say in specific corporate initiatives. We require each of our sub-advisors to have proxy-voting policies in place and to vote all proxies in the best interest of our unitholders. We also review proxy-voting records to validate that voting is in line with stated policies and objectives.
Sun Life Global Investments is a trade name of SLGI Asset Management Inc., Sun Life Assurance Company of Canada, and Sun Life Financial Trust Inc.
SLGI Asset Management Inc. is the investment manager of the Sun Life Mutual Funds, Sun Life Granite Managed Solutions and Sun Life Private Investment Pools.
© SLGI Asset Management Inc. and its licensors, 2020. SLGI Asset Management Inc. is a member of the Sun Life group of companies. All rights reserved.